SYNOPSI REPORT ON

AWARENESS ABOUT THE DERIVATIVE AND ITS

COMPARISON WITH EQUITY
UNDERTAKEN AT:



NIRMAL BANG SECURITIES PVT. LTD



















INTRODUCTION:-

Nirmal Bang Securities Private Limited, a retail broking house, provides an online share trading
platform to customers to trade on equities, derivatives, commodities, currency derivatives,
insurance, depository services, and subscription to initial public offerings and mutual funds in
India. The company offers daily and company reports, stock ideas, and sector updates. It also
provides franchising opportunities to individual to use its infrastructure by being its channel
partners. Nirmal Bang Securities was founded in 1986 and is based in Mumbai, India.

Nirmal Bang Group is one of the largest retail broking house in India, providing the investors
state of art services in capital markets in the country. The Group has memberships of Bombay
Exchange Limited, National Stock of India Limited, Multi Commodity Exchange of India
Limited, National Commodity and Derivatives Exchange Limited and is also a depository
participant of NSDL and CDS (I) L, the depositories of the country.
They started in 1986 under Late Shri Nirmal Bang as sub brokers but have grown steadily and
progressively since then. Their clients had contributed tremendously to their growth they
recognize and applaud that, they value their relationship with the customers and for their
convenience had all investing avenues under one roof.

NIRMAL BANG consultant
As the flagship company of the NIRMAL BANG Group, NIRMAL BANG Private Limited has
always remained at the helm of organizational affairs, pioneering business policies, work ethic
and channels of progress.
NIRMAL BANG believe that they were best positioned to venture into that activity as a
Depository Participant. They were one of the early entrants registered as Depository Participant
with NSDL (National Securities Depository Limited), the first Depository in the country and
then with CDSL (Central Depository Services Limited). Today, It service over 1Lac customer
accounts in this business spread across over 350 cities/towns in India and are ranked amongst the
largest Depository Participants in the country. With a growing secondary market presence.

Business Focus:-
The focus of the business is the Customer Customer service, Customer education, Customer
support, Customer relations and last but not the least Customer acquisition. Trade execution
transparency, timely settlements, risk monitoring and superior service shall have topmost
priority, in the best interests of all concerned.

VISION STATEMENT

TO CREATE VALUABLE RELATI ONSHI P AND PROVI DE THE BEST
FI NANCI AL SERVI CES MOST PROFESSI ONALLY


MISSION STATEMENT

TO WORK TOGETHER WI TH I NTEGRI TY & MAKE OUR CUSTOMER
FEEL VALUED


CORE VALUE

RESPECT OUR COLLEAGUE AND THE BUSINESS ITSELF

NIRMAL BANGs CORE SERVICES:-

NIRMAL BANG is one of Indias leading broking houses providing a complete life-cycle of
investment solution.






















THEORETICAL ASPECT

INTRODUCTION:
According to dictionary, derivative means something which is derived from
another source. Therefore, derivative is not primary, and hence not independent. In
financial terms, derivative is a product whose value is derived from the value of one or
more basic variables. These basic variable are called bases, which may be value of
EQUITIES
DERIVATIVES
COMMODITIES

Research Based
Investment Advice
Investment and
Trading Services
Integrated Demat
Facility
Technology Based
Investment Tools
Training and
Seminars
underlying asset, a reference rate etc. the underlying asset can be equity, foreign
exchange, commodity or any asset.

For example: - the value of any asset, say share of any company, at a future
date depends upon the shares current price. Here, the share is underlying asset, the
current price of the share is the bases and the future value of the share is the
derivative. Similarly, the future rate of the foreign exchange depends upon its spot rate
of exchange. In this case, the future exchange rate is the derivative and the spot
exchange rate is the base.



Derivatives are contract for future delivery of assets at price agreed at the time
of the contract. The quantity and quality of the asset is specified in the contract. The
buyer of the asset will make the cash payment at the time of delivery.

Meaning:
Derivatives are the financial contracts whose value/price is dependent on the
behavior of the price of one or more basic underlying assets (often simply known as
the underlying). These contracts are legally binding agreements, made on the trading
screen of stock exchanges, to buy or sell an asset in future. The asset can be a share,
index, interest rate, bond, rupee dollar exchange rate, sugar, crude oil, soybean,
cotton, coffee etc.

In the Indian Context the Security Contracts (Regulation) Act, 1956 (SC(R) A)
defines derivative to include
A security derived from a debt instrument, share, loan whether secured or
unsecured, risk instrument or contract for differences or other form of security.
A contract, which derives its value from the prices, or index of prices of
underlying securities.













In financial terms derivatives is a broad term for any instrumental whose value is
derived from the value of one more underlying assets such as commodities, forex,
precious metal, bonds, loans, stocks, stock indices, etc.
Derivatives were developed primarily to manage offset, or hedge against risk but
some were developed primarily to provide potential for high returns. In the context of
equity markets, derivatives permit corporations and institutional


Investors to effectively manage their portfolios of assets and liabilities through
instrument like stock index futures.

Contracts agreement
Cash Derivatives
Forward Others like
Swaps, FRAs etc
Merchandis
ing,
customized
Futures
(Standardized
)
Options
NTSD TSD
Risk Associated With Derivatives:


While derivatives can be used to help manage risks involved in investments,
they also have risks of their own. However, the risks involved in


derivatives trading are neither new nor unique they are the same kind of risks
associated with traditional bond or equity instruments.

Market Risk
Derivatives exhibit price sensitivity to change in market condition, such as
fluctuation in interest rates or currency exchange rates. The market risk of leveraged
derivatives may be considerable, depending on the degree of leverage and the nature
of the security.



Liquidity Risk
Most derivatives are customized instrument and could exhibit substantial
liquidity risk implying they may not be sold at a reasonable price within a reasonable
period. Liquidity may decrease or evaporate entirely during unfavorable markets.


Credit Risk
Derivatives not traded on exchange are traded in the over-the-counter (OTC)
market. OTC instrument are subject to the risk of counter party defaults.

Hedging Risk
Several types of derivatives, including futures, options and forward are used as
hedges to reduce specific risks. If the anticipated risks do not develop, the hedge may
limit the funds total return.




FUNCTION OF DERIVATIVES MARKET:-
The derivative market performs a number of economic functions:-

Prices in an organized derivatives market reflect the perception of market
participants about the future and lead the prices of underlying to the perceived
future level. The prices of derivative converge with the prices of the underlying at
the expiration of the derivative contract. Thus, derivatives help in discovery of
future as well as current prices.
The derivatives market helps to transfer risks from those who have them but
may not like them to those who have an appetite for them.
Derivatives, due to their inherent nature, are linked to the underlying cash
market. With the introduction of the derivatives, the underlying market witnesses
higher trading volumes because of the participation by more players who would
not otherwise participate for lack of arrangement to transfer risk.



Speculative trades shift to a more controlled environment of derivatives market.
In the absence of an organized derivative market, speculators trade in the
underlying cash market.
An important incidental benefit that flows from derivatives trading is that it acts
as a catalyst for new entrepreneurial activity.


The derivatives have a history of attracting many bright, creative, well-educated
people with an entrepreneurial attitude. They often energize others to create
new businesses, new products and new employment opportunities, the benefit
of which are immense.
Derivatives markets help increase savings and investment in the end. Transfer
of risk enables market participants to expand their volumes of activity.

RESEARCH METHODOLOGY:-

Problem Statement:
The topic, which is selected for the study, is DERIVATIVE MARKET in the firm
so the problem statement for this study will be, AWARENESS ABOUT THE
DERIVATIVE AND ITS COMPARISION WITH EQUITY.

Objective of the Study:
1. To know the awareness of the Derivative Market in Surat City.
2. To know which one is beneficial for the investor.
3. To find what proportion of the population are investing in such derivatives along
with their investment pattern and product preferences.

Research Design:
The research design specifies the methods and procedures for conducting a
particular study. The type of research design applied here are DESCRIPTIVE as the
objective is to check the position of the Derivative Market in Surat city. The objectives
of the study have restricted the choice of research design up to descriptive research
design. This survey will help the firm to know how the investors invest in the derivative
segment & which factors affect their investing behavior.

Scope of the Study:
The scope of the study will include the analysis of the survey, which is being
conducted to know the awareness of the Derivative Market in the city & also doing
comparison of derivatives with equity.





Research Source of Data:-
There are two types of sources of data which is being used for the studies:-

Primary Source of Data:
Preparing a Questionnaire is collecting the primary source of data & it was
collected by interviewing the investors.

Secondary Source of Data:
For having the detailed study about this topic, it is necessary to have some of
the secondary information, which is collected from the following:-Books.
Magazines & Journals.
Websites.
Newspapers, etc.

Methods of Data Collection:-
The study to be conducted is about the awareness of the Derivative Market in
the Surat City so the method of data collection used id SURVEY METHOD.


APPENDIX
Questionnaire

Myself Saurav.P.Gohil student of B.B.A studying at Vivekanand College for
B.B.A, Surat. I had prepared this questionnaire for project work meant for educational
purpose only. On Awareness about Derivatives and Its Comparison with Equity.

No personal information will be disclosed in any form at anywhere.


1. ARE YOU INVESTING IN DERIVATIVE MARKET?

YES

NO

2. REASON FOR NOT INVESTING IN DERIVATIVE MARKET. {GIVE THE RANK}

LACK OF KNOWLEDGE LACK OF AWARENESS

HIGH RISKY HUGE AMOUNT OF INVESTMENT

OTHER





3. WHAT ARE THE OBJECTIVES OF THE INVESTING IN DERIVATIVES
MARKET?














4. WHAT ARE THE CRITERIA DO YOU TAKEN IN THE CONSIDERATION WHILE
INVESTING IN DERIVATIVE MARKET?


SCALE
5 4 3 2 1
INSTRUMENT MOST
PREFERED
SOMEWHAT
PREFERED
NUTRAL SOMEWHAT
NOT
PREFERED
NOT AT
ALL
PREFERED
HIGH RETURN
HEDGE THE
RISK

MORE
RELIABLE

SAFE TO
INVEST IN
DERIVATIVE
MARKET




MORE LIQUID
SCALE 5 4 3 2 1
INSTRUME
NT
MOST
PREFERE
D
SOMEWH
AT
PREFERE
D
NUTRAL SOMEWH
AT NOT
PREFERE
D
NOT AT
ALL
PREFERE
D
FLEXIBILIT
Y

EASE IN
TRANSAC
TION

LESS
COSTLY

AVALABILI
TY OF
DIFFEREN
T
CONTRAC
T

MARGIN
MONEY








5. GIVE YOUR PREFERENCE OF INVESTMENT IN DERIVATIVE INSTRUMENT.


SCALE 5 4 3 2 1
INSTRUME
NT
MOST
PREFERE
D
SOME
HOW
PREFERE
D
NEUTRAL SOMEWH
AT NOT
PREFERE
D
NOT AT
ALL
PREFERE
D
INDEX
FUTURE

STOCK
FUTURE

INDEX
OPTION

STOCK
OPTION












6. GIVE YOUR PREFERENCE IN TERMS OF INVESTMENT DERIVATIVE MARKET.

SCALE 5 4 3 2 1
TERMS MOST
PREFER
SOMEWHA
T PREFER
NEATRUL SOMEWHA
T NOT
PREFER
NOT AT
ALL
PREFER
SHORT
TERM

MEDIUM
TERM

LONG
TERM



7. HOW MUCH PERCERNTAGE OF YOUR INCOME YOU INVEST IN DERIVATIVE
MARKET?

LESS THAN 5% 5% TO 10%

11% TO 15% 16% TO 20%

MORE THAN 20%







8. WHAT IS THE RATE OF RETURN EXPECTED BY YOU FROM DERIVATIVE
MARKET?

5 % TO 9.5% 10% TO 13.5%

14 % TO 17% 18% TO 23%

ABOVE 23%

9. YOU ARE SATISFIED WITH THE CURRENT PERFORMANCE OF THE
DERIVATIVE IN TERMS OF EXPECTED RETURN.

STRONGLY AGREE AAGREE

NUTRAL DISAGREE

STRONGLY DISAGREE.















DEMOGRAPHIC PROFILE

NAME:

CONTACT NO:

EMAIL ID: .

AGE:

BELOW 20YRS 20 TO 30 YRS

31 TO 40 YRS 41 TO 50 YRS

ABOVE 50


GENDER:

MALE FEMALE










FROM WHICH CATEGORY DO YOU FEET MORE?

STUDENT

EMPLOYEED

BUSINESS OWNER

OTHER


INCOME {YEARLY}:

LESS THAN 100000RS.

100000 TO 200000RS.

200001 TO 300000RS.

300001 TO 400000 RS

ABOVE 400000RS.

THANK YOU